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HMRC need to address ‘two tier’ system of tax agents, says Tax Faculty

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HMRC do not recognise or give ‘proper credit’ for a tax agent’s membership of a professional body, the ICAEW Tax Faculty said in response to the department’s consultation on a strategy for engaging with tax agents.

‘HMRC needs to examine the particular risks posed by unqualified agents and how these are addressed, for example whether the tax profession should be fully qualified,’ the Faculty said in response to consultation paper Establishing the future relationship between the tax agent community and HMRC.

'One very worthwhile improvement would be to give all taxpayers “view only” access to their tax data and a fast-track facility to contact HMRC to report changes.'

Robin Williamson, LITRG

‘The existence of unqualified tax agents means that there is not a level playing field for all agents but instead a two-tier system where unregulated agents do not have to maintain professional standards or prove academic qualifications. We appreciate that some unqualified agents maintain high professional standards, but even then this compliance is optional rather than obligatory, and there is no independent oversight or sanctions.’

The tax system ‘has no place for dishonest agents’, the Faculty added. ‘Where poor performance is identified, HMRC should first discuss any concerns with the firm and give them a chance to improve. If this does not work then further measures will be needed which might involve reporting any member to the relevant professional body. HMRC should only refuse to deal with an agent if all other options have failed and, even then, the agent should have the right to have the case reviewed by an independent body and thereafter by a Tribunal.’

Of the tax agent strategy proposals, ‘self serve’ was the most attractive to agents and offered ‘clear benefits’ to HMRC in improving service standards. It would be the most difficult part of the package to implement but it was ‘essential that enrolment, self serve and the agent view proposals are developed and implemented as a package’.

Last week’s joint statement on HMRC service delivery issues was an important step towards HMRC meeting the same performance standards that agents are expected to meet, the Faculty noted.

There is still ‘a need to articulate more clearly HMRC’s intended end result of the whole project’, said the CIOT and ATT said in a joint submission. Concerns over safeguards, IT systems and security must be addressed in detail, they said.

Last month the CIOT and ATT suggested that HMRC should take deliberate steps to ‘win the trust’ of tax agents. There was ‘a general belief that [the consultation] is about HMRC saving costs, their inability to cope and wanting to move work to agents’, they said. ‘Our sense is that members do not object to this per se but find the comments emanating from HMRC over whether the [tax agent strategy] is about cost saving contradictory.’

Unrepresented taxpayers

HMRC must ensure that unrepresented taxpayers are not left behind, the CIOT’s Low Incomes Tax Reform Group warned. ‘Passing functions to tax agents which only HMRC can carry out at present will generate cost savings for HMRC, said Robin Williamson, LITRG Technical Director.

‘These savings must be reinvested in improvements to customer service from which all taxpayers, represented or unrepresented, may benefit. One very worthwhile improvement would be to give all taxpayers “view only” access to their tax data and a fast-track facility to contact HMRC to report changes.’

The ‘paid agent community’

  • Approximately 70% of paid agents are a member of one of the main member bodies in the UK
  • Around 80% hold a formal qualification
  • Some 20,000 of agent firms have a single owner/principal
  • On average even the smallest firms have typically around 300 clients. The SME and individual agent market accounts for more than £2.4bn in annual accountancy fees
  • HMRC incurs costs approaching £200m pa in providing services for and supporting agents
  • In addition to the main seven bodies in the UK there are many bodies and associations who provide training, professional support and qualification to those working within the accounting and tax adviser profession
  • HMRC currently provides £2m pa grant funding to voluntary organisations providing vital support to some of our customers. In 2009/10 approximately 1.4m people received support through that grant programme.

Source: HMRC consultation, Establishing the future relationship between the tax agent community and HMRC, 31 May 2011